Correlation Between Tway Air and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Tway Air and Namhwa Industrial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tway Air and Namhwa Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tway Air Co and Namhwa Industrial Co, you can compare the effects of market volatilities on Tway Air and Namhwa Industrial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tway Air with a short position of Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tway Air and Namhwa Industrial.
Diversification Opportunities for Tway Air and Namhwa Industrial
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tway and Namhwa is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air Co and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial and Tway Air is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tway Air Co are associated (or correlated) with Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of Tway Air i.e., Tway Air and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Tway Air and Namhwa Industrial
Assuming the 90 days trading horizon Tway Air Co is expected to generate 2.78 times more return on investment than Namhwa Industrial. However, Tway Air is 2.78 times more volatile than Namhwa Industrial Co. It trades about 0.02 of its potential returns per unit of risk. Namhwa Industrial Co is currently generating about 0.05 per unit of risk. If you would invest 248,500 in Tway Air Co on September 25, 2024 and sell it today you would earn a total of 3,500 from holding Tway Air Co or generate 1.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Tway Air Co vs. Namhwa Industrial Co
Performance |
Timeline |
Tway Air |
Namhwa Industrial |
Tway Air and Namhwa Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tway Air and Namhwa Industrial
The main advantage of trading using opposite Tway Air and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tway Air position performs unexpectedly, Namhwa Industrial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Namhwa Industrial will offset losses from the drop in Namhwa Industrial's long position.Tway Air vs. Korean Drug Co | Tway Air vs. KTB Investment Securities | Tway Air vs. DSC Investment | Tway Air vs. NH Investment Securities |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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